What changed
RBI now credits compounding fee refunds via NEFT instead of cheques, requiring applicants to provide bank mandate details upfront. The annexes for FDI, ECB, ODI, and Branch/Liaison Office applications have been updated to include income-tax PAN and activity as per NIC codes 1987 as mandatory fields.
What it means for you
Banks and their customers must ensure FEMA compounding applications are complete with all prior approvals to avoid returns. The shift to NEFT refunds speeds up the process, but missing PAN or NIC code will now lead to automatic rejection. This reduces back-and-forth correspondence and streamlines the compounding process.
What you must do
- Advise customers to submit compounding applications only after obtaining all required approvals and completing transactions.
- Ensure applicants provide bank account mandate details (as per Annex) for NEFT refunds.
- Verify that FDI, ECB, ODI, and Branch/Liaison Office applications include income-tax PAN and NIC code 1987.
- Remind customers to update any change in address/contact details during pendency of the application.
Who it affects
All Category-I Authorised Dealer Banks, Applicants for compounding of FEMA contraventions, Customers dealing with FDI, ECB, ODI, and Branch/Liaison Office matters
What happens if my compounding application is returned?
The application fee of Rs. 5000 will be refunded via NEFT to the bank account you provide. Ensure you submit the mandate details to avoid delays.
What are the new mandatory fields in the application annexes?
The annexes for FDI, ECB, ODI, and Branch/Liaison Office now require income-tax PAN and the activity as per NIC codes 1987. Applications without these will be treated as incomplete.